HOTEL DEVELOPERS ARE continuing to pursue a newfound interest in boutique hotels, according to an article from Frances Kiradjian, founder and CEO of Boutique and Lifestyle Leaders Association. As more large hotel companies buy out boutique hotels or launch soft brands to accommodate the sector, Kiradijian questions whether the independent boutique owners will continue to reciprocate the relationship.
In her article in Forbes magazine, Kiradijian cites numbers from a recent report CBRE Hotels Americas Research that found boutique hotels comprised 3.2 percent of the total U.S. lodging supply in 2017 and 17.8 percent of the rooms in development as of June 2018 are in boutique projects.
“Last year, the 1,281 properties considered boutique and lifestyle hotels in the U.S. achieved an aggregated occupancy of 70.5 percent and an ADR of $208.52, beating the overall U.S. lodging industry by nearly six percentage points,” she said.
Kiradijian also lists recent purchases of boutique properties by large brands, such as Hyatt Hotels Corp.’s purchase of Two Roads Hospitality with its Thompson Hotels, Joie de Vivre and Destination Hotels groups for $480 million last month. Other companies are launching brands aimed at boutiques, like Kinley, the brand launched by Vision Hospitality Group under CEO Mitch Patel in November.
Still, she points out that while the appeal of boutique hotels to owners is their unique experiential atmosphere that offers guests something close to what they may seek in Airbnb, a closer connection to the life of the cities in which they are located. That approach may be difficult to incorporate into the business model of a large corporation despite the marketing benefits they offer, such as large loyalty rewards programs.
“By joining the larger groups, these independent hotels are forced to buy into the larger companies’ ‘brand standards’ and other rules, regulations and long-term agreements,” Kiradijian said. “Will these hotel owners continue to enjoy the tradeoff of independence for a little exposure to loyalty members and corporate groups, or will many of them find that their properties may not be properly housed in the right brand or don’t belong within a larger group at all? Only time will tell.”